LONDON: A new computer system acquired to collect customs duties and clear imports into the UK may not be able to handle the huge upsurge in workload expected once Britain leaves the EU, government customs authorities have acknowledged to a parliamentary inquiry. HM Revenue & Customs told investigators the new system had fallen into the category of programmes needing “urgent action” in order to be ready by March 2019, when Brexit is due to be complete; the chair of the parliamentary inquiry said confidence that it would be operational in time “has collapsed”. Setting up a new digital customs system has been at the heart of Whitehall’s Brexit planning because of the fivefold increase in declarations expected at British ports when the UK leaves the EU.
About 53 per cent of British imports currently come from the EU, meaning they do not require tracking or checks because they arrive through the EU’s single market and customs union. But Theresa May, prime minister, announced in January that Brexit would include departure from both trading blocs. The Revenue currently handles 60m declarations a year but, once outside the EU customs union, that number is expected to rise to 300m. The revelations about the system, called the Customs Declaration Service, are likely to throw a sharper spotlight on whether Whitehall can implement a host of new regulatory regimes, in areas ranging from customs and immigration to agriculture and fisheries, by the time Britain leaves the EU.
Problems with CDS and other projects essential to Brexit could force the government to adjust its negotiation position with the EU, one Whitehall official said. “If running our own customs system is proving much harder than we anticipated, that ought to have an impact on how we press for certain options in Brussels,” the official said. In a letter to Andrew Tyrie, who chairs the Commons Treasury select committee, the Revenue insisted the timetable for delivering CDS was “challenging but achievable.” But the Revenue added that CDS was “a large and complex programme” that needs to be linked up to dozens of other computer systems — covering everything from number plate recognition to aviation tracking — in order to work properly. In November, the Revenue assigned a “green traffic light” to the CDS project, a rating that indicates it would be delivered successfully and on time. But last month the Revenue wrote to the committee saying the programme had been relegated to “amber/red”, which means there are “major risks or issues apparent in a number of key areas.”
In its correspondence with MPs, which the select committee is publishing on Friday, the Revenue provided no precise explanation for the change. But some MPs believe the downgrade was caused by Mrs May’s unexpected decision to leave the EU customs union. Mr Tyrie said he would ask the Treasury and the government agency that oversees big projects, the infrastructure and projects authority, for more detail on the changed rating. “Customs is at the heart of the Brexit debate,” Mr Tyrie said. “The consequences of this project failing, or even being delayed, could be serious. Much trade could be lost.” The Revenue said: “We are fully focused on playing our part in making the UK’s exit from the EU, and our new trading relationship with the world, a success. “Our new Customs Declaration Service is on track to be delivered by January 2019, and it will be able to support frictionless international trade once the UK leaves the European Union.” According to one MP, the difficulties facing CDS raise the question whether Philip Hammond, the chancellor, was right to cut public spending at a number of departments with a heavy Brexit workload. The Revenue annual budget is being cut from £3.6bn in 2016-17 to £2.9bn in 2019-20. The department is expected to fund new frontline services by finding additional efficiency savings despite the budget cuts.
